View
229
Download
0
Category
Preview:
Citation preview
8/3/2019 SEZ Draft Bill-Final
1/34
The Special Economic Zones Bill, 2010
THE SPECIAL ECONOMIC ZONES BILL
ARRANGEMENT OF SECTIONS
PART I PRELIMINARY
Section
1. - Short title2. - Interpretation
3. Objective and purpose of the Act
PART II ESTABLISHMENT, FUNCTIONS AND POWERS OF THE SPECIAL
ECONOMIC ZONES AUTHORITY
4. Establishment of the Special Economic Zones Authority
5. - Functions and powers of the Authority
6. Board of Directors7. - Tenure of office
8. - Termination of appointment
9. - Remuneration10. - Meetings of the Board
11. - Committees of the Board
12. - Disclosure of interest
13. - Common seal of the Authority14. - Chief Executive Officer
15. - Staff
16. Protection from personal liability17. - Liability in Tort or contract
PART III FINANCIAL PROVISIONS
18. - General Fund of the Authority
19. - Financial year 20. - Annual Estimates
21. Accounts and Audit
PART IV- DECLARATION OF A SPECIAL ECONOMIC ZONE
22. - Declaration of a special economic zone
23. - Activities permitted within a special economic zone24. Facilities within a special economic zone
1
8/3/2019 SEZ Draft Bill-Final
2/34
The Special Economic Zones Bill, 2010
PART V LICENSING PROVISIONS.
25. - Licenses
26. - Register of licenses
PART VI SPECIAL ECONOMIC ZONE DEVELOPERS AND OPERATORS.
27. - Qualifications of special economic zone developer and operator
28. Powers of an economic zone developer
PART VII- SPECIAL ECONOMIC ZONES ENTERPRISES.
29. - Establishment of special economic zones enterprises
PART VIII- OPERATIONS WITHIN A SPECIAL ECONOMIC ZONE.
30. - Goods considered to be exported and imported into Kenya.
31. - Goods within a special economic zone
32. - Prohibited activities within the special economic zone33. - Removal of goods from the special economic zone
34. - Receipts and payments of special economic zone enterprises
PART IX BENEFITS TO SPECIAL ECONOMIC ZONES ENTERPRISES
35. - Benefits accruing to special economic zone enterprises
PART X DISPUTE RESOLUTION
36. Disputes
PART XI- MISCELLANIOUS PROVISIONS
37. - Power of the Minister to give directions
38. - Regulations39. - General provisions of the Minister
PART XII- TRANSITIONAL PROVISIONS
40. Repeal41. Saving provisions
SCHEDULE Limitations on imports
2
8/3/2019 SEZ Draft Bill-Final
3/34
The Special Economic Zones Bill, 2010
SPECIAL ECONOMIC ZONES BILL, 2010
A Bill for an Act of Parliament to provide for the establishment of specialeconomic zones; to provide for the promotion and facilitation of global and local
investors, the development and management of enabling environment for such
investments; to repeal Export Processing Zones Actand for connected purposes.
Enacted by the Parliament of Kenya as follows:-
PART I PRELIMINARY
Short title. 1. This Act may be cited as the Special Economic ZonesBill, 2010.
Interpretation.
Cap.486
2. In this Act, unless the context otherwise requires-
authority means the Special Economic Zones Authority
established under section 4;
Board means the Special Economic Zones Authority Boardestablished under section 6;
business incubation means an economic development tooldesigned to accelerate growth and success of entrepreneurial
companies through business support resources and services.
company has the meaning as in section 2 of the Companies
Act or a company incorporated outside Kenya but registered in
Kenya under the Companies Act;
commercial activity means trading in, breaking bulk, grading,repacking or re-labelling of goods and industrial raw materials
customs control means the measures applied to ensure
compliance with the laws and regulations which the customs
officers are responsible for enforcing;
customs officer means a customs officer appointed under the
3
8/3/2019 SEZ Draft Bill-Final
4/34
The Special Economic Zones Bill, 2010
Cap. 472
Customs and Excise Act
customs territory means the territory in which the customs
laws of Kenya apply in full, but does not include a specialeconomic zone;
director means a member of the Board;
duty means the fiscal, customs and excise duty for the time
being levied under any written law;
East African Community Common Market means the Partner
States markets integrated into a single market in which there isfree movement of capital, labour, goods and services;
export means to-
(i) take or cause to be taken out goods or services out ofthe customs territory or into a special economic zone
by land, sea or air or by any other mode, whether
physical or otherwise.
(ii) supply or provide services, from the customs
territory to a Special Economic Zone
(ii) provide goods or services from one Special Economic
Zone Enterprise to another or Special Economic Zone
Developer in the same or different Special EconomicZone
export processing zone means a designated part of a special
economic zone predominantly oriented for exportmanufacturing;
free port means a special economic zone adjacent to a port of
entry (lake port, seaport, or airport) where imported goods may be unloaded for immediate transhipment, storage, re-packing,
sorting, mixing or otherwise manipulated;
free trade zone means a special economic zone where any
goods introduced are generally regarded, in so far as import dutyand taxes are concerned, as being outside the customs territory
and are not subject to the usual customs control;
4
8/3/2019 SEZ Draft Bill-Final
5/34
The Special Economic Zones Bill, 2010
Cap. 472
Cap.469
Fund means the general fund established under section 18;
goods include all kinds of articles, wares, merchandise andstock and, where any such goods are sold under the Customs and
Excise Act, include the proceeds of sale;
information communications technology park means adesignated area in a special economic zone where information
technology related knowledge and service industries are attracted
and facilitated through availability of buildings, specific orgeneral infrastructure, available technical workforce and
business support services.
industrial park means a special economic zone with integrated
infrastructure and environmental controls specific to the needs of
an industrial area.
import duties and taxes means customs duties and all other
duties, taxes, fees or other charges which are collected on or in
connection with the importation and exportation of goods butdoes not include fees and charges which are limited in amount to
the costs of services rendered under this Act;
Kenya Revenue Authority means the Authority established
under section 3 of the Kenya Revenue Authority Act.
licence means a licence issued under this Act;
manufacture means to make, produce, fabricate, assemble,
process or bring into existence by manual, mechanical, chemicalor biochemical methods into a new product having a distinctive
name, character or use and includes processes such as
refrigeration, cutting, polishing, blending, repair, re-making and
re-engineering.
Minister means the minister for the time being responsible fortrade.
negative list" means a list of activities not allowed to beundertaken by special economic zone enterprises.
5
8/3/2019 SEZ Draft Bill-Final
6/34
The Special Economic Zones Bill, 2010
primary activities includes agriculture, aquaculture, animal
husbandry, floriculture, horticulture, pisciculture, poultry,silviculture, sericulture, viticulture and mining.
regional headquarters means an entity of regional executives
and directors who are employed by foreign companies and are
based in Kenya for the purpose of managing the affairs of those
companies.
science and technology park means a designated part of a
special economic zone devoted to scientific and technologicalresearch including educational or research institutions for the
development of science and technology based industries.
special economic zone means a designated geographical area
with liberal economic laws and with highly developed
infrastructure or which has the potential to be developed as perthe activities listed under Section 23(1) of the Act, and where
any goods introduced and services provided are generally
regarded, in so far as import duties and taxes are concerned, as
being outside the customs territory but are duly restricted bycontrolled access and wherein the benefits provided under this
Act apply;
special economic zone enterprise means a corporate body;
which has been licenced under this Act;
special economic zone export means any product sold by a
special economic zone enterprise for exportation direct or
through the customs territory;
special economic zones developer means a corporate body
established to develop and administer a special economic zone
under this Act;
special economic zone import means any input or service
supplied to a special economic zone enterprise within a specialeconomic zone ,whether from outside or inside the customs
territory;
special economic zone operator means a corporate body
engaged in the management of a special economic zone
6
8/3/2019 SEZ Draft Bill-Final
7/34
The Special Economic Zones Bill, 2010
Objectives
and purposes
designated under section 27;
services means tradable services which-
(i) are covered under the General Agreement on Trade in
Services annexed as 1B to the Agreement
establishing the World Trade Organisation concluded
at Marrakesh on the 15th day of April, 1994.
(ii) may be prescribed by the Government of Kenya for
the purposes of this Act
tourist and recreational centre means a designated part of aspecial economic zone where accommodation and recreationalfacilities in accordance with guidelines issued by Special
Economic Zones Authority.
3. (1) The principal objectives of the Act shall be to-
(a) develop all aspects of special economic zones with particular emphasis on developing integrated
infrastructure facilities, provision of advice on the
removal of impediments to, and creation of incentives fortrade, services and manufacturing in areas designated as
special economic zones; and
(b) regulate and administer approved activities within the
special economic zones.
PART II ESTABLISHMENT, FUNCTIONS AND
POWERS OF THE SPECIAL ECONOMIC
ZONES AUTHORITY
7
8/3/2019 SEZ Draft Bill-Final
8/34
The Special Economic Zones Bill, 2010
Establishment
of the SpecialEconomicZonesAuthority.
Functions andpowers of the
Authority.
4. There is established the Special Economic ZonesAuthority as a body corporate with perpetual succession and a
common seal which shall be capable in its corporate name of-
(a) suing and being sued;
(b) taking, purchasing or otherwise acquiring, holding,charging and disposing of movable and immovable
property;
(c) having and managing its own general fund including
borrowing and lending money;
(d) entering into contracts;
(e) doing or performing all such other things or actsnecessary for the proper performance of its functions
under this Act which may lawfully be done by a
corporate body.
5. For the purposes of carrying out the objectives
specified in section 3, the Authority may exercise, perform
and discharge all or any of the following powers, duties andfunctions-
(a) advise the Minister on all aspects of establishment ofspecial economic zones;
(b) implement the policies and programmes of the
Government with regard to the establishment of thespecial economic zones;
(c) identify and map the areas to be designated as special
economic zones;
(d) plan the development and maintenance, and to financethe basic infrastructure up to the perimeter of special
economic zones;
(e) undertake the provision of water and sewerage services in
special economic zones;
8
8/3/2019 SEZ Draft Bill-Final
9/34
The Special Economic Zones Bill, 2010
(f) examine and process application for establishment ofspecial economic zones and issue relevant approvals;
(g) examine and process applications for licences by special
economic zone developers, operators, and enterprises;
and issue relevant licences;
(h) promote and market special economic zones among
investors;
(i) issue certificates of origin to special economic zone
enterprises for the purposes of a generalized system of preferences and other trade preferences given underbilateral or multilateral trade agreements;
(j) act as a one-stop centre through which specialeconomic zone enterprises can channel all their
applications for permits and facilities not handled directly
by the Authority;
(k) process building plans and issue relevant approvals in
consultation with the Ministry responsible for Physical
Planning and other relevant Authorities;
(l) perform administrative functions in relation to the
designated special economic zones as would normally beperformed by local authorities;
(m) maintain current data on the performance of the
programme in each individual special economic zone andenterprises;
(n) enforce within the special economic zone compliancewith customs procedures and other requirements for
preventing the unauthorized use of designated specialeconomic zones, enterprises and business incubators;
(o) enforce compliance with the banking procedures andother requirements for preventing the unauthorized use of
approved special economic zone activities;
9
8/3/2019 SEZ Draft Bill-Final
10/34
The Special Economic Zones Bill, 2010
Cap. 472
Cap. 476
(p) draw up and regularly update a negative list of activitiesthat are not allowed in the Special Economic Zones;
(q) approve business services to be rendered within a special
economic zone.
(r) suspend or cancel the licence of a special economic zoneenterprise or a special economic zone developer which is
in the violation of the Customs and Excise Act, and the
Value Added Tax Act; and
(s) do all such other acts as may be incidental or conduciveto the attainment of the objective of the Authority or theexercise of its powers under this Act.
(2) Without prejudice to the generality of the powersconferred under this Act, the Minister shall make rules in
consultation with the Authority as may be required for the
purpose of ensuring orderly and fair development and operation
of special economic zones, enterprises and export businessincubator enterprises, and in particular rules to-
(a) determine application procedures and criteria for theapproval of special economic zones, developers,
operators, enterprises or business incubators; and
(b) determine procedures for providing the benefits accruing
to special economic zone developers, operators and
enterprises;
(c) ensure adequate security within the special economic
zones;
(d) determine the form of the licences to be issued under this
Act and the procedures for amendment and revocation ofthe licences;
(e) determine entry of personnel into a special economiczone; and
10
8/3/2019 SEZ Draft Bill-Final
11/34
The Special Economic Zones Bill, 2010
Cap 480
(f) require information from special economic zone
developers, operators and enterprises.
(3)The Authority shall be exempt from payment of any stampduty chargeable under the Stamp Duty Act.
Board ofDirectors.
6. (1) There is established a Board of Directors of
the Special Economic Zones Authority and shall consist of
the following directors-
(a) a chairman to be appointed by the President;
(b) the Permanent Secretary to the Treasury;
(c) the Permanent Secretary in the Ministry for the timebeing responsible for Industry;
(d) the Permanent Secretary in the Ministry for the timebeing responsible for Trade;
(e) the Permanent Secretary in the Ministry for the time
being responsible for Information and CommunicationsTechnology;
(f) the Permanent Secretary in the Ministry for the timebeing responsible for Transport;
(g) the Permanent Secretary in the Ministry for the time
11
8/3/2019 SEZ Draft Bill-Final
12/34
The Special Economic Zones Bill, 2010
being responsible for Regional Development Authorities;
(h) the Commissioner General, Kenya Revenue Authority;
(i) the Commissioner of Lands;
(j) the Chief Executive of the Kenya Investment Authority;
(k) the Chief Executive of the Kenya Export Promotion
Council;
(l) the Chief Executive of the Kenya Private Sector Alliance;
(m)not more than three other directors appointed by theMinister from the private sector, who have experience
and expertise in any of the following:-
(i) manufacturing,
(ii) information communications technology,
(iii) trade,
(iv) law,(v) financial matters; and
(vi) agriculture and agro-processing.
(n) a Chief Executive appointed by the Minister after
consultation with the Board who shall be an ex-officio
director and secretary to the Board.
(2) The Board shall have the overall management,
development and control of the Special Economic Zones and all
functions vested to the Authority by this Act.
Tenure ofoffice.
7. The chairman or a director appointed under section 6 (j)
shall hold office for a period of three years and shall be eligiblefor re-appointment for one other term.
Terminationof
appointment
8. The Minister may terminate the appointment of a director
of the Board appointed under section 6(j) if the director-
(a) delivers to the Minister a written resignation of the
12
8/3/2019 SEZ Draft Bill-Final
13/34
The Special Economic Zones Bill, 2010
appointment;
(b) is, on the advice of the Board, incapacitated by mental or
physical illness or is otherwise unable or unfit todischarge the functions of a director or is unable to
continue as a director;
(c) is, without reasonable cause, absent for three consecutivemeetings of the Board;
(d) is adjudged bankrupt or enters into a compositionscheme or arrangements with his creditors;
(e) is sentenced by a court to imprisonment for a term of sixmonths or more; or
(f) is convicted of an offence involving dishonesty; fraud ormoral turpitude.
Remuneration.
9. The directors of the Board shall be paid such remuneration
and allowance out of the general Fund of the Authority as may
be determined by the Minister.
Meetings ofthe Board.
10. (1) The chairman of the Board shall convene a meeting at
least once every three months and whenever the chairman
receives a written request by at least two directors, and in the
absence of the chairman, meetings shall be convened by theChief Executive and the directors present shall elect one of the
directors to preside as chairman.
(2) The quorum of the Board shall be one half of the totalnumber of the Board.
(3) The Board may, subject to the requirements of the
quorum, regulate the procedure in regard to meetings and the
transaction of business at the meetings.
(4) If the chairman of the Board by reason of extended
13
8/3/2019 SEZ Draft Bill-Final
14/34
The Special Economic Zones Bill, 2010
illness or absence, is temporarily unable to perform the duties of
his office, the directors may elect a director among the directorsappointed under section 6(j) to act in the place of the chairman
during the period of absence;
(5) The chairman may, at any time resign by a letter
addressed to the President and the resignation shall take effect
upon being accepted by the President.
Committees of
the Board.
11. The Board may from time to time establish committeesfor the better carrying out of its functions, powers and duties
under this Act.
Disclosure ofinterest.
12. (1)Any director of the Board who has a direct or indirect
personal interest in a matter being considered or to be considered
by the Board shall, as soon as reasonably practicable after therelevant facts concerning the matter have come to his
knowledge, disclose the nature of the interest to the Board.
(2) A disclosure of interest made under subsection (1)
shall be recorded in the minutes of the meeting of the Board, andif either the director or majority of the directors of the Board
believe that the interest of that director in the matter mayinfluence his judgement, that director shall not participate in the
consideration or discussion of or vote during any deliberations
on the matter by the Board.
Common sealof the
Authority.
13. (1) The common seal of the Authority shall be kept in
the custody of the Chief Executive and shall not be affixed toany instrument or document except as authorised by the
Authority.
(2) All documents other than those required by law to be
under seal, made by, and all decisions of the Authority may be
given under the hand of the chairman, or, in the case of a
decision taken at a meeting at which the chairman is not present,under the hand of the director presiding at that meeting.
14
8/3/2019 SEZ Draft Bill-Final
15/34
The Special Economic Zones Bill, 2010
ChiefExecutiveOfficer.
14. (1) There shall be a chief executive officer of theAuthority appointed by the Minister, on the recommendation of
the Board on terms and conditions specified in the instrument ofhis appointment.
(2) The Chief Executive shall, subject to the general
direction and control of the Board, be responsible for themanagement of the Authority, the exercise, discharge and
performance of its objectives, functions and duties, and the
administration and control of the staff.
(3) The Minister may, on recommendation of the Board,terminate the appointment of the chief executive officer.
Staff. 15. (1) The Board may appoint staff as it considersnecessary for the efficient discharge of its responsibilities and
functions.
(2) The staff appointed under subsection (1) shall beremunerated at a rate to be determined by the Authority and shall
be subject to conditions of service as may be determined by the
Authority.
Protectionfrom personal
liability.
16. (1) The directors or staff of the Authority shall not be
personally liable for an act which is done or purported to be donein good faith by that person, on the direction of the Authority or
in the performance or intended performance of any duty or in the
exercise of any power under this Act or the regulations made
thereunder.
(2) Any expenses incurred by a person referred to in
subsection (1) in any suit or prosecution brought against him
before any court in respect of any act which is done or purportedto be done by him under this Act on the direction of the Board
shall, if the court holds that that act was done in good faith bepaid out of the general fund of the Authority, unless the expenses
are recovered by him in that suit or prosecution.
Liability in
15
8/3/2019 SEZ Draft Bill-Final
16/34
The Special Economic Zones Bill, 2010
tort orcontract.
17. The provisions of section 16 shall not relieve the Board
the liability in tort or contract, to pay compensation or damagesto any person for any injury to him, his property or any of his
interests caused by the exercise of any power conferred by thisAct, or any other written law.
PART III- FINANCIAL PROVISIONS
General Fundof theAuthority.
No. 5 of 2004.
18. (1) There is established a general fund of the Authority.
(2) The funds of the Authority shall comprise all suchsums of money as may be-
(a) appropriated by Parliament;
(b) paid as fees, rents or service charge for use
of properties belonging to the Authority
under this Act; and
(c) received by the Authority as grants,
donations, loans for its operations subject toGovernment Financial Management Act.
(3) There shall be paid out of the fund all such sums ofmoney required to defray the expenditure incurred by the
Authority in the exercise, discharge and performance of its
objectives, functions and duties under this Act.
Financial
Year.
19. The financial year of the Authority shall be the period of
twelve months ending on the 30th June every year.
AnnualEstimates.
20. (1) The Board shall, before the commencement of every
year cause to be prepared the estimates of revenue andexpenditure of the Authority for that financial year.
(2). The annual estimates shall make provisions for all
the estimated expenditure of the Authority for the financial yearconcerned and in particular shall provide for-
16
8/3/2019 SEZ Draft Bill-Final
17/34
The Special Economic Zones Bill, 2010
a) payment of salaries, allowances and
other charges in respect with the staff ofthe Authority;
b) payment of pensions, gratuities and
other charges in respect of retirements
benefits which are payable out of the
funds of the Authority;
c) the funding of promotion and marketingof Special Economic Zones;
d) the funding of training, research anddevelopment activities of the Authority;
e) the acquisition, maintenance, repair andreplacement of equipment and other
movable and immovable property of the
Authority;
f) the creation of reserve funds to meet
future or contingent liabilities; and
g) to fund the expenditure incurred by the
Authority in the exercise, discharge, and
performance of its objectives, functionsand duties under this Act.
(3) The annual estimates shall be approved by the Board
before the commencement of the financial year which theyrelate.
Accounts andAudit.
21. (1) The Authority shall cause proper books of accounts
to be kept of its income and expenditure, assets and liabilitiesand all other financial transactions of the Authority.
(2) The Board shall within three months from the end
of the financial year submit to the Controller and Auditor-
General or an auditor appointed under subsection (3), theaccounts of the Authority together with a statement of-
17
8/3/2019 SEZ Draft Bill-Final
18/34
The Special Economic Zones Bill, 2010
(a) income and expenditure during the
year; and
(b) assets and liabilities of the Authorityon the last day of that year.
(3) The accounts of the Authority shall be audited by
and reported upon in accordance with the provisions of thePublic Audit Act.
PART IV DECLARATION OF A SPECIAL ECONOMIC
ZONE AND ACTIVITIES WITHIN A SPECIAL
ECONOMIC ZONE.
Declaration ofSpecial
EconomicZones .
22. (1) The Minister may, on the recommendation of the
Authority, and by notice in the Gazette, declare any area
including land and premises in Kenya to be a special economiczone.
(2) A declaration of a special economic zone under
subsection (1) shall define the limits of the zone and shall remainin force until revoked by the Minister, on the recommendation of
the Authority, by order in the Gazette.
Activitiespermitted
within aspecial
economiczone
23.(1) The activities eligible to be carried out within special
economic zones includes primary activities, industrial activities,
service activities, ICT and related services, tourism andrecreational services, regional supervisory services, applied
research and development activities, commercial activities, other
services not listed under this section and classified under the
business service permit.
(2) Where manufacturing and commercial activities
involving goods manufactured outside Kenya are carried on by a
special economic zone enterprise, the two activities shall bephysically separated.
(3) Where commercial activities involve goods
manufactured outside Kenya, such goods shall be clearly
labelled as products of the country where such goods weremanufactured.
18
8/3/2019 SEZ Draft Bill-Final
19/34
The Special Economic Zones Bill, 2010
(4) The Authority shall give notice to the Kenya Revenue
Authority of every special economic zone enterprise licencedunder this section specifying:-
(a) the activities in respect of which the enterprise is
licenced; and
(b) any conditions attached to the licence.
Facilitieswithin a
specialeconomic
zone
24.(1)The Authority may require the special economic zonedeveloper to provide and maintain in a special economic zone
such facilities including adequate enclosure to separate a specialeconomic zone from the customs territory, as it may considernecessary for the proper and efficient function of the zone.
9 (2) The Authority may at its discretion order the exclusion orremoval from a special economic zone of any goods or
discontinuance of any activity or operations which in its opinion
are dangerous or prejudicial to public interest, health or safety:
Provided that the Authority shall not issue an orderunder this section without first giving such a person
an opportunity of being heard.
(3) The customs officer in each special economic zone
shall offer on-site inspection to the special economic zone for
imports into, and exports out of, the special economic zone.
(4) A person who contravenes this section commits an
offence and is liable on conviction to a fine not exceeding two
million shillings or to imprisonment for a term not exceedingthree years or both.
PART V LICENSING PROVISIONS
19
8/3/2019 SEZ Draft Bill-Final
20/34
The Special Economic Zones Bill, 2010
Licenses
25. (1) A person shall not carry on business as a special
economic zone developer, operator or an enterprise or export business incubator or hold himself out as providing or
maintaining activities or facilities within a special economiczone unless that person has been licensed as a special economic
zone developer or operator or enterprise or export business
incubator enterprise as the case may be.
(2) The Authority shall render its decision on the
designation of a special economic zone and all other approvals
required under this Act within two working days from the dateon which the completed application form together with relevant
supporting documents for the relevant approval or the licencehas been received by the Authority.
(3) A licence issued under this subsection shall be in
the prescribed form.
Register oflicences.
26. The Authority shall keep in a form as it considers
appropriate, a register of the holders of current licences issued
under this Act specifying-
(a) the company name; and
(b) the address of the principal place at which the company
carries on business;
(2) Where-
(a) the holder of the licence ceases to carry on the business
to which the licence relates; or
(b) a change occurs in any particulars which are required to
be entered in the register of licence holders with respect
to the holder of a licence,
the holder shall within fourteen days of the occurrence of theevent concerned give to the Authority particulars of the change
in the prescribed form.
PART VI SPECIAL ECONOMIC ZONE DEVELOPERS
AND OPERATORS
20
8/3/2019 SEZ Draft Bill-Final
21/34
The Special Economic Zones Bill, 2010
Qualificationsof a specialeconomiczone
developer andoperators.
27. (1) A special economic zone developer and operator shall-
(a) be a company incorporated in Kenya for the sole purpose
of developing and operating a special economic zone;
(b) have the necessary capital and expertise required for
developing the special economic zone; and
(c) except for a special economic zone operator appointed
under section 22, own or lease land or premises for a
minimum period of thirty years within the specialeconomic zone.
(2) A special economic zone developer shall, onapplication, receive a special economic zone operators licence
from the Authority if it qualifies under the criteria prescribed by
the Authority.
28.A special economic zone developer shall have powers to;
(a)act or appoint a special economic zone operator to
undertake management and administration of the specialeconomic zone on its behalf subject to section 24;
(b) lease, sub-lease or sell land or buildings to licensedspecial economic zone enterprises, and charge rent or
fees for other services that may be provided, in
convertible foreign currency;
(2) The special economic zone developer shall-
(a) make improvements to the special economic zone siteand its facilities according to the plans approved by the
Authority;
(b) provide or facilitate provision of infrastructure and other
services according to the design and engineering studies
submitted to the Authority together with the application;
(c) provide adequate enclosures to segregate the zone area
from the customs territory for the protection of revenue
together with suitable provisions for the movement of
21
8/3/2019 SEZ Draft Bill-Final
22/34
The Special Economic Zones Bill, 2010
persons, conveyances, vessels and goods entering or
leaving the zone;
(d) provide adequate security on the site officeaccommodation and facilities for customs as determined
by the Authority;
(e) adopt rules and regulations for businesses within thezone, which shall promote its safe and efficient
operations;
(f) maintain adequate and proper accounts and other records
in relation to its business and report on zone activities, performance and development to the Authority on anannual basis or as required by the Authority, the Kenya
Revenue Authority, the Central Bank, the Kenya
National Bureau of Statistics or other relevant authorities;and
(g) register any lease agreements and services.
(3) The accounts and records required under paragraph (f)
shall be maintained in English.
(4) A special economic zone developer or a special
economic zone operator who fails to maintain
adequate and proper accounts and other records asrequired by this section commits an offence and
liable to a fine not exceeding three hundred
thousand shillings or to imprisonment not
exceeding six months or both.
PART VII SPECIAL ECONOMIC ZONESENTERPRISES
Establishmentof special
economiczoneenterprises.
29. (1) A special economic zone enterprise shall not be
established, and the benefits described in part IX shall not accrueto any enterprise, unless the special economic zone enterprise
holds a valid licence issued by the Authority.
22
8/3/2019 SEZ Draft Bill-Final
23/34
The Special Economic Zones Bill, 2010
(2) The Authority shall grant a licence if the application meets
the objectives of this Act and if the proposed business enterprise-
(a) is incorporated in Kenya, whether or not it is one hundredpercent foreign owned, for the sole purpose of producing
goods or services for export within a special economic
zone;
(b) proposes to engage in any activity or activities eligible to
be undertaken by a special economic zone enterprise or
export business incubator enterprise in the specialeconomic zone;
(c) shall not have a deleterious impact on the environment orengage in unlawful activities, impinging on national
security or may prove to be a health hazard; and
(d) conducts business in accordance with the laws for the
time being in force save for any exemptions that may be
granted from time to time.
PART VIII OPERATIONS WITHIN SPECIAL
ECONOMIC ZONES
Goods to beconsidered to
be exportedand importedinto Kenya.
30. Unless otherwise provided under this Act or under any otherwritten law-
(a) goods which are taken out from any part of the customsterritory and brought into the special economic zone or
services provided from part of the customs territory to a
special economic zone shall be deemed to have beenexported from Kenya and shall be paid for in convertible
currency; and
(b) goods which are brought out of a special economic zone andtaken into any part of the customs territory for use therein or
services provided from a special economic zone to any part
of the customs territory shall be deemed to be imported.
23
8/3/2019 SEZ Draft Bill-Final
24/34
The Special Economic Zones Bill, 2010
Goods withina specialeconomiczone
31.(1) Subject to section 30, goods within a special economic
zone shall not be taken out of the zone except-
(a) for export; or
(b) for export into the customs territory, with the approval of
the Authority and subject to the import and customs
procedures and payment of import duties; or
(c) for repair and maintenance or processing or conversion
with prior approval of the Authority and undersupervision of customs and subject to any conditions as
may be imposed.
(2) Subject to section 30, services provided by a special
economic zone enterprise shall be provided to-
(a) persons outside Kenya; or
(b) other special economic zone enterprises in furtherance of
the export activities of such enterprises subject toapproval of the Authority; or
(c) persons in the customs territory subject to approval of theAuthority.
Prohibitedactivities
within aspecialeconomiczone
32.(1) No retail trade in goods produced in the special
economic zone or imported into the special economic zone shallbe conducted within the special economic zone except with the
approval of the Authority and in areas designated as retail outlets
licensed by the Authority.
(2) Goods manufactured in a special economic zone shall not
be used in the zone for personal consumption.
(3) A person shall not carry on business in a Special
Economic Zones involving the importation or handling of used
apparel, including used clothing or footwear.
(4) A person who contravenes this section is guilty of an
offence and is liable to a fine not exceeding two million shillingsor imprisonment for a term not exceeding three years or to both.
24
8/3/2019 SEZ Draft Bill-Final
25/34
The Special Economic Zones Bill, 2010
Removal ofgoods from aspecialeconomic
zone
33.(1) Subject to this Act, goods within a special economic zonemay-
(a) be removed under supervision of a customs officer fromthe zone for export or sent into another special economic
zone or bonded factory, either in its original package or
otherwise;
(b) unless otherwise directed by the Authority-
(i) be stored, sold, exhibited, broken up, repacked,assembled, distributed, sorted, graded, cleaned,
mixed, or otherwise manipulated or be manufactured
in accordance with the provision of this Act; or
(ii) be destroyed under the supervision of the Customs
Officer.
(2) Subject to this Act, goods of any description whichwould be used directly for the manufacture of other goods by alicensed special economic zone enterprises and business
incubator or goods manufactured in any part of the customs
territory which are meant for export may be brought into a
special economic zone.
(3) A person who contravenes this section is guilty of an
offence and is liable to a fine not exceeding two million shillingsor imprisonment for a term not exceeding three years or both and
the goods shall be forfeited under the Customs and Excise Act
and the EAC Customs Management Act.
Receipts andpayments ofspecial
34. (1) Unless otherwise provided under this Act or under
any other written law-
(a) payments of funds by a special economic zone enterprise
which may be received by a resident or non-resident of
the customs territory and debited from the foreign
25
8/3/2019 SEZ Draft Bill-Final
26/34
The Special Economic Zones Bill, 2010
economiczonesenterprises.
currency account legally maintained and operated by a
special economic zone enterprise shall be subject to theprovisions of the Central Bank Act applicable to all
transactions between such persons and non-residents;
(b) receipts of funds by special economic zone enterprises
which may be paid by residents or non-residents as
defined under the Banking Act shall only be credited intoforeign currency accounts legally maintained and
operated by the special economic zone enterprises
provided those payments arise in relation to authorizedspecial economic zone products or other transactions
duly approved under the Central Bank Act; and
(c) all currency transactions between special economic zone
enterprises and non-resident persons, resident outside the
customs territory, shall be in accordance with the CentralBank Act.
(2) Notwithstanding subsection (1), all financial
transactions, including payment of salaries and wages, betweenspecial economic zones enterprises and persons resident in
Kenya shall be carried out through commercial bank accounts.
PART IX BENEFITS TO SPECIAL ECONOMIC
ZONE ENTERPRISES
Benefitsaccruing to
specialeconomiczoneenterprise.
Cap.472
Cap476
Supra
35 (1) The special economic zone enterprises, developers,
operators and the export business incubator enterprises shall be
granted exemption from all existing and future taxes and duties payable under the Customs and Excise Act, EAC Customs
Management Act and Value Added Tax Act on all special
economic zone imports for use in the eligible business activitiesof the special economic zone enterprise including, machinery
and equipment, spare parts, tools, raw materials, intermediate
goods, construction materials and equipment, office equipment
and supplies, and transportation equipment subject to thelimitations on goods specified in the First Schedule to this Act
and in accordance with the conditions specified in the Customs
and Excise Act, EAC Customs Management Act and the Value
26
8/3/2019 SEZ Draft Bill-Final
27/34
The Special Economic Zones Bill, 2010
Cap.470
Added Tax Act.
(2) Subject to subsection (1), the special economic zone
enterprises, developers, zone operators and the export businessincubator enterprises shall be granted the following exemptions-
(a) exemption from the payment of income tax in respect of
Freeport, free trade zone, and commercial enterprises ;
(b) exemption from the payment of income tax as specified in
the Income Tax Act as follows;
(i) Special Economic Zone Developers andOperators-
for the first ten years from the date of completion
of the development, except that the income taxrate shall be limited to twenty per cent for the ten
years following the expiry of the exemption
granted under this paragraph.
(ii) Special Economic Zones Business
Incubators-
For the first ten years from the date of the first
sale except that the income tax shall be limited to
twenty per cent for the next ten years followingthe expiry of the exemption granted under this
paragraph.
(iii) Export Processing Zones Exportmanufacturing and Export Service enterprises-
for the first ten years from the date of the first
sale, except that the income tax rate shall belimited to twenty per cent for the next ten years
and twenty five per cent thereafter.
(iv) Special Economic Zones Technology Park
Enterprises-
for the first ten years from the date of the first
27
8/3/2019 SEZ Draft Bill-Final
28/34
The Special Economic Zones Bill, 2010
Cap 486
sale, except that the income tax shall be limited to
twenty per cent thereafter for the life of theEnterprise.
Provided that this exemption shall not apply in
respect of Industrial Parks, Agricultural Free Zone
Enterprises and Tourism and Recreational
Enterprises and Regional Headquarters Enterpriseswho shall pay income tax rate at twenty per cent.
(b) exemption from the payment of withholding tax ondividends and any other payments made to non-residents
during the period that the special economic zone enterprise isexempted from payment of income tax under paragraph (c);
(c) exemption from stamp duty on the execution of any
instrument relating to the business activities of specialeconomic zone enterprise; except for Agricultural Free Zone
enterprises, Regional headquarters and Industrial Park
Enterprises who shall be entitled to a fifty per cent reduction
of stamp duty payable;
(d) exemption from quotas or other restrictions or
prohibitions on import or export trade with the exception oftrade in firearms, military equipment or other illegal goods;
(e) exemption from the provisions of the Companies Actrelating to allotment of shares to non-residents
(h) exemption from the provisions of the Foreign Investment
Protection Act relating to certificate for approved enterprise;
(i) exemptions from the provisions of the Statistics Act;
(j) exemption from the payment of advertisement fees and
Business service permit fees levied by Local Authorities and by
laws made under that Act;
(k) exemption from Hotel licences, and Restaurant licence issued
28
8/3/2019 SEZ Draft Bill-Final
29/34
The Special Economic Zones Bill, 2010
Cap. 518.
No. 4 of 2006.
Cap. 265
Cap 494.
Cap 121.
Cap 254.
Cap 343.
Cap 333
Cap. 318
Cap 340
Cap 341.
Cap. 336
under the Hotels and Restaurants Act;
(l) exemption from general liquor licence and hotel liquor
Licence under the Liquor Licensing Act;
(m) exemption from licence under the Food, Drugs and
Chemical Substances Act to use premises to sell,
prepare, store or display for sale, any food;
(n) exemption from manufacturing licence under Tea
Act;
(o) exemption from licence to buy, sell, mill, warehouse, exportor otherwise deal in or transact business in coffee under theCoffee Act
(p)exemption from registration of large scale farms under section22(6) of the Agriculture Act;
(q)exemption from licence for a factory under the Sisal Industry
Act;
(r) exemption from registration, Dairy Managers and Retail
licence and licence as a purveyor of milk under the DairyIndustry Act;
(s)exemption from certificate of registration and licence to catchfish or for a foreign vessel under the Fisheries Act;
(t)exemption from manufacturing licence under the Pharmacy
and Poisons Act;
(u)exemption from Private Carriers licence under the Transport
Licensing Act;
(v)exemption from licence to deal in motor vehicle components
or accessories under the Motor Vehicle Components andAccessories Act;
(w)exemption from licence to trade in unwrought preciousmetals under the Trading in Unwrought Precious Metals Act;
29
8/3/2019 SEZ Draft Bill-Final
30/34
The Special Economic Zones Bill, 2010
Cap 378.
Cap 224
Cap. 404
Cap 520
Cap 309
Cap. 310
Cap. 222
Cap. 301
Cap. 411A
(x)exemption from Diamond Dealers Licence under the
Diamond Industry Protection Act;
(y)exemption from Filming Licence under the Films and StagesPlays Act;
(z) entitlement to Class A expatriate work permits for technical,
supervisory and managerial staff granted within forty days ofapplication with a limit of up to five per cent of total workforce
and Class H work permits for directors within thirty days of
application;
(aa)exemption from rent or tenancy controls under the Landlordand Tenant (Shops, Hotels and Catering establishments) Act;
(bb)exemption from licences issued under the Kenya
Information and Communication Act;
(cc)any other exemptions as may be granted by the Minister by
notice in the Gazette.
PART X - DISPUTE RESOLUTION
Disputes 36. (1) Where a dispute arises between a special economic zone
enterprise and the Authority or the Government in respect of abusiness enterprise, all efforts shall be made to settle the dispute
through negotiations and mutual agreement for an amicable
settlement.
30
8/3/2019 SEZ Draft Bill-Final
31/34
The Special Economic Zones Bill, 2010
No 4 of 1995.
(2) A dispute under subsection (1) which is not settled may, atthe option of the offended party, be submitted to arbitration in
accordance with any of the following methods as may bemutually agreed by the parties-
(a) in accordance with the rules of procedure forUnited Nations
UNCTRAL; or
b) within the framework of any bilateral or multilateral
agreement on investment protection to which theGovernment and the country of which the investor is a
national or are parties; or
(c) In accordance with the Arbitration Act.
(3) If the parties do not agree to the mechanisms of settlement ofdispute under subsection 2(a) and (b) within fourteen days, the
Arbitration Act shall apply.
PART XI MISCELLANEOUS PROVISIONS
Power of the
Minister togivedirections.
37. (1) The Minister may give directions to the Authority
as the Minister may consider necessary for the properfunctioning of a Special economic zone or for the purpose of
protection of revenue and foreign exchange earnings.
(2) The Minister may from time to time direct theAuthority to furnish in such form as he may require returns,
accounts and any other information with respect to the work of
the Authority.
38. The Minister may make regulations in respect of any
matter required by the Act to be prescribed or in respect of which
regulations are authorized to be made.
. 39. (1) The Minister may, for health, environmental or
public security reasons and by order published in the Gazette,exclude goods or services from the provisions of this Act.
(2) The Minister may, for health, environmental or public
security reasons and by order published in the Gazette prohibits
31
8/3/2019 SEZ Draft Bill-Final
32/34
The Special Economic Zones Bill, 2010
any goods from being taken into a special economic zone
PART XII - TRANSITIONAL PROVISIONS
Repeal
Cap.517
40. The Export Processing Zones Act is repealed.
Saving
provisions.
Cap.517.
41. (1) Notwithstanding the repeal of the Export ProcessingZones Act all the licences issued under that Act and in force
immediately before the commencement of this Act shall beconsidered to have been granted under the provisions of this Act,
and shall remain in force until revoked in accordance with any
terms set out in the licence or renewed under this Act.
(2) Any regulation or other instrument made or issued
under the Export Processing Zones Act shall continue to haveeffect as if such regulation or other instrument were made or
issued under this Act.
(3). All the property, assets, rights and liabilities,obligations and agreements including (any contracts of
employment) vested in, acquired, incurred or entered into by or
on behalf of the Export Processing Zones Authority shall beconsidered to be vested in or to have been acquired by the
Special Economic Zones Authority and accordingly every such
right, liability, obligation or agreement may be enforced by oragainst the Special Economic Zones Authority.
(4) All persons who, before the commencement of this Act
are employed by the Export Processing Zones Authority shall atthe commencement of this Act be considered employees of the
Special Economic Zones Authority and employed in accordance
with this Act.
(5) Where at the commencement of this Act any penalty
other than dismissal has been imposed on any employee of theExport Processing Zones Authority in accordance with the
32
8/3/2019 SEZ Draft Bill-Final
33/34
The Special Economic Zones Bill, 2010
disciplinary proceedings against that employee, and the penalty
has not been or remains to be served by that employee, thatemployee shall, on his transfer to the Special Economic Zones
Authority, serve or continue to serve such penalty to its full termas if it had been imposed by the Special Economic Zones
Authority.
SCHEDULE
LIMITATIONS ON IMPORTS
The following goods may be imported free of import duty and
value added tax by a special economic zone enterprise or aspecial economic zone developer.
Subject to the following limitations:-
i) One motor vehicle for each of the Directors of
a special economic zone enterprise, Developer and Operator
provided that it is registered in the name of the said Director;
ii) Not more than three motor vehicles of any type whether
passenger, utility or vessel by a special economic zone
developer, operator or enterprise for use in its eligiblebusiness activities subject to the prior approval in writing
by the Authority.
Amos Kimunya,
Minister for Trade
33
8/3/2019 SEZ Draft Bill-Final
34/34
The Special Economic Zones Bill, 2010
.
Recommended